10 Reasons for Business Success or Failure

Since the housing bubble burst in 2008, many businesses have struggled to stay above water. The lack of discretionary income on consumers left many business operators scrabbling for strategies to keep their organizations alive and well. This hub explores 10 reasons why some business succeed while others fail.

Empowering Leadership

The first factor for business success is empowering leadership. This type of business management style has also been called transformational leadership. Transformational leadership is the type of motivational style that draws others in and inspires them to achieve something greater than themselves. However, the employees and staff members do not merely do the work; they also become better people in the process.

More and more enlightened employers are learning that employee satisfaction has a direct impact on the quality and sustainability of the enterprise. In fact, companies like Google have paved a new road of follower-centered leadership by offering services that help employees feel wanted and make their lives more efficient and effective. Such services can include company buses to pick up employees, in-house fry cleaning and in-house day care services. When employees are able to worry less about day to day issues outside of work, then they feel empowered to think creatively about their work.

Well-Defined Vision

The second factor to business success is a well-defined vision. A corporate vision is a scripted understanding of what a company wants to do and how they want to accomplish it. A well-defined vision allows members of an organization to unite for a common cause with singular aim and all energy focused in one direction.

No matter which leadership theory one espouses, all leadership theories identified with positive outcomes include vision as part of the make up of a successful company. Organizations that actively scan the horizon and tweak and sometimes redefine their visions will more likely maintain a sustainable competitive advantage.

Relevant Knowledge of the Business Market

A third factor for business success is relevant knowledge of the business market. In order to do anything well, a person or company must do their homework to gain a deep understanding about the factors that are essential for success. These days as the World Wide Web continues to expand, there is no excuse for a would-be entrepreneur to lack knowledge of whatever business they feel led to pursue. Sadly, many businesses are dead out of the gate because they do not take the time to gain a proper perspective on the industry.

Detailed Business Plan

Another factor for business success is the formulation of a comprehensive business plan. Knowing about an industry and sketching out a vision is only the beginning of a successful enterprise. The next step is to take what you know and what you want to accomplish and write a detailed strategy for how to make it happen. A business plan covers all the related factors that are essential for a winning enterprise including vision, description of the market, projected financials, employee relationships and customer relations management (CRM).

Assessment of the Direct and Indirect Competition

When getting ready to implement a new business, another important factor for success or failure is the nature of the direct and indirect competition for the same product or service. For instance, a person or group wishing to open an online outlet for used furniture should take adequate time to research how many other competitiors are trying to do the same thing. When doing the research the group should ask: who is the competition? What products and services do they offer? What is their pricing structure? What kind of shipping do they offer? and the like. Gaining a firm grasp of the competition can definitely make the difference between staying alive long-term or filing for bankruptcy.

Availability of Financing

A sixth factor important to the success or failure of a business is available financing. The current economic crisis in America has made venture capital difficult to find. Of course, if a company can manage to avoid using credit altogether then this is not a problem. Still, most new businesses need some kind of seed money to get them up to speed and thus the ability to secure working capital is critical to keeping the doors open.

Solid Customer Relations Management

A seventh reason for business success or failure is how a company realtes to their customers. This seems like a no brainer, but the better an organization handles their client base the more apt it will be to stay in business. Enterprises that take time to think out common and uncommon situations before they encounter them will be more likely to keep customers coming back. Those groups that merely define their customer relationships on the fly or in the heat of the moment are doomed to fail.

Well-Managed Supply Chain

Another reason for business success or failure is how a company manages its inventory. in order to keep the right mix of products on the shelves, an enterprise needs to think through its supply chain processes. Too much inventory can tie up working capital, but too little inventory can lead to shortages and lower customer satisfaction. JIT (or just-in-time) inventory management is one supply chain strategy that has benefited such large organizations like Wal-Mart, Dell Computers, and Toyota Motors.

Proper Timing

An eighth reason for business success or failure is timing. In 1998, when the latest housing boom began it was probably a good time to enter into the home mortgage industry; in 2006, when the housing bubble began to burst it was probably a poor time to set up a new mortgage outfit. Part of learning about an industry is getting a good feel for its business cycle; although trying to time the market can lead to indecision.

Well-Devised Decision Making System

Decision-making is at the heart of any business and the best organizations have outlined a step of procedures involved in the decision-making process. Those entities that tend to practice participative leadership allow representatives from all departments to be involved in the process and seem to gain stronger employee buy in. Most poorly led organizations do not encourage participation and often lack a well-defined procedure for making decisions. One solid decision-making scheme is the nine-step problem-solving model. The steps in the model are:

1. Describe the situation in detail

2. Frame the "right" problem

3. Describe the end-state goals from a broad perspective of values

4. Identify the alternatives

5. Evaluate the alternatives

6. Identify and assess the risks

7. Make the decision

8. Develop and implement the solution

9. Evaluate the results

Government Regulatory Measures

A tenth reason for business success or failure is how much the owners of an enterprise have a good grasp on the rules and regulations governing their sector of the economy; this includes having a clear understanding of the tax structure. Many would-be entrepreneurs charge into a good idea not knowing what restrictions apply to the execution of the idea. For instance, a businessperson may take a vacation in Southeast Asia, go shopping in a local bizaar, and think that he can make a huge profit importing garments and handicrafts. Accordingly, he may purchase 1000 shoulder bags for $3000 thinking he can surely sell them for $10 a bag back home. However, before throwing down his cash, he did not realize he would have to pay a duty of $3 a bag to export them from the foreign country; another tariff to import them into his home country; not to mention taxes on the income. Not knowing the extent to government interference in an industry can mean the difference between success and failure of a business.

Questions & Answers

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Emma

9 months ago

I think hard work is also necessary. Otherwise its awesome.

AUTHOR

ecoggins

4 years agofrom Corona, California

Thank you jeetendra for your wonderful feedback. You are right to point out that the article would be stronger with good examples. I appreciate your comments very much.

jeetendra shrestha(nepal)

4 years ago

i found impressive definitions about the topic success and failure of business.the points that you have defined are practical definitions and applicable in the current situation of world.i feel something lack.it would be better to mention suitable and real examples in it.thank you for providing such impressive article.i am eger to know more about this topic.if it is possible then i will be waiting for other articles in my email. jeetendra5608@gmail.com

AUTHOR

ecoggins

6 years agofrom Corona, California

Martin and FSlovenec, Thank you for your positive input. I appreciate it very much.

Martin, attention to detail is indeed important, thank you for that insight. You can count the 11th point as an add bonus for no extra charge.

FSlovenec, you are right when you say well-planned practice makes perfect. It is important to do the things that relate specifically to the task or objectives of the organization and say no to good but unnecessary practices. This relates to Jim Collins' hedge hog concept which he highlighted in the best seller Good to Great.

Thank you both for your helpful insights and encouraging words.

Frank Slovenec

6 years agofrom San Francisco, CA

All good..I would add action and constantly creating momentum..the ten are good when effectively applied..Practice does not make perfect but well planned practice makes perfect..you have the planning part down. Thanks

Martin Peterson

6 years ago

Attention to detail is also very important, which is why I'm surprised you have 11 reasons and your title is '10 reasons for business success or failure'.

Mahaveer Sanglikar

6 years agofrom Pune, India

Well written and useful Hub, thank you for sharing the information. Voted up.

Omeone in Thailand

6 years ago

I think the key factor is "Intellectual capital management".

AUTHOR

ecoggins

6 years agofrom Corona, California

Charlane, thank you for the encouraging feedback. I am very happy this hub was a help to you.

charlane

6 years ago

thank you so much hub!.... I got alot of info for I was doing an assignment for school purposses!.... Im realy greatful:-)

dannyjames

7 years ago

Mayor Bloomberg has been nominated as Legend of the Month on Legendary Moves: www.legendarymoves.com

AUTHOR

ecoggins

7 years agofrom Corona, California

KBEvolve, Thank you for your enocuraging comments. I appreciate them and hope all the best to you.

Kenneth Brown

7 years agofrom United States

I learned a lot from this article. It was a clear and concise list of strong concepts for achieving success.

Amit

7 years ago

Thanks a lot, Nice Hub

AUTHOR

ecoggins

7 years agofrom Corona, California

Modeinkcheery, Thank you for sharing your comment. innovation is another key to business success or failure, isn't it? The ability to devise new products and services that meet the demnads of consumers will allow an enterprise to maintain a strategic competitive advantage.

Modelnkcheery

7 years ago

The powerful key to bussiness decision is innovation.

akiiki hak

7 years ago

im atually going to get afirst class degree because of this lovely work

AUTHOR

ecoggins

7 years agofrom Corona, California

ahostagesituation, that you for sharing with me. I am glad that you found this hub was helpful to you. I wish all the best to you in everything.

SJ

7 years ago

I like this hub. When I pointed out my ineptitude at certain aspects of my business, my quasi-spouse-advisor-man pointed out that I don't have to shoot a gun to lead an army. Your points on empowering leadership and well-defined vision stand out to me. If at least the concept of leadership can be inspired in those who don't naturally have it then it's less work for the person making decisions for the company. I want to empower leadership.

Zain

7 years ago

Good work done but nevertheless still a lot of things missing like examples citation to justify each steps given above.

AUTHOR

ecoggins

8 years agofrom Corona, California

ebrahim, thank you for your encouraging comments. I will check out your link.

Mr G Bverkerwa, I appreciate your enocuragement and am very glad that you found this hub useful. All the best to you in everything.

Mr G Bvekerwa

8 years ago

i have learnt a lot from your hub/article. keep on e good work.u are ment to be e leader of our companies through the net.

AUTHOR

ecoggins

8 years agofrom Corona, California

Mr. Fisherman, I'm happy you found it helpful. All the best to you.

Mr. Fisherman

8 years ago

Informative. Thanks for sharing. :)

AUTHOR

ecoggins

8 years agofrom Corona, California

KenWu, thanks again.

KenWu

8 years agofrom Malaysia

Precisely written and it all rooted back to entrepreneurship and leadership skills.

AUTHOR

ecoggins

8 years agofrom Corona, California

thanks Bridget for your insights. good solid partners and dependable employees are an important part of whether a business is a successful or failure. Sounds like you have a great business going. I appreciate your enocuragement.

Bridget Davidson

8 years ago

You also need partners you can trust and employees you can depend on. Here at GlobalTranz we have the best of both worlds, including all of our successful freight agents. You were right on with this hub!

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